The Canberra bubble and self-interest groups have completely hijacked the advice debate and the subsequent decisions which have been made with no understanding of the consequent impact on consumers, their needs and affordability, according to financial planning business broker, Paul Tynan.
Tynan has warned that there is a danger that in a post-Royal Commission environment, the Australian financial planning industry will be a story of ‘haves’ and ‘have nots’.
He said that the post-Keating era saw the rise of institutions moving into the advice space and a consequent clash of business models between short-term time horizons (banking) and long-term time horizons (advice) with the outcome being a lack of corporate governance, profit before clients and unethical business practices.
“I am certain that the post-RC ramifications will be as equally devastating but the real victims will be the consumers,” Tynan said. “If all of the recommendations are implemented we will see advice become unaffordable to the majority of Australians.”
“Australia will develop a two-tier ‘haves’ and ‘haves not’ advice structure, where a small minority will be able to afford advice and the majority unable to do so and all of these issues will be magnified within regional Australia where there will be a lack of advisers and a deficiency in connectivity,” he said.
Tynan said Government, the Australian Securities and Investments Commission and the planning associations had been so consumed with conflicted remuneration that they had failed to understand why commissions were developed to be paid out of product and why this concept came about globally within financial services.
“If the decision-makers were genuinely concerned about conflicted remuneration, they could have simply required every piece of advice to be in the best interest of the client and set level commission per centages,” he said.